FED
- There are only two meeting previews that we’ve seen that look for a 50bp cut: JPMorgan and Wrightson ICAP. Some had seen 50bp prior to last week’s CPI data, but changed their view.
- Expected Rate Path: The vast majority of analysts expect a total of 75bp of cuts this year (range of 50bp to 125bp) including September’s decision, with between 25 and 175bp of cuts in 2025.
- Adding it up, the median analyst expects 200bp of cuts through end-2025, for a Fed funds rate range of 3.25-3.50%, though the range of total expected cuts is between 100 and 250bp.
- Dot Plot: The expectation by almost all analysts is for the FOMC to pencil in a 4.6% rate median for 2024 (ie 75bp of 2024 cuts), though this depends in part on the size of this meeting’s cut – nobody sees a median higher than 4.6% though some see a 4.4% median.
- For end-2025, there is a much wider dispersion of expectations, with a range of 2.9% to 3.6%, with most eyeing 3.1% or 3.4%. 2026 and 2027 are seen to reflect rates of around 3.0%, while the longer-run median of 2.8% is largely seen to remain unchanged.
- Statement: There are varying expectations for the change in the Statement's forward guidance, ranging from relatively cautious to more overt signaling that future cuts are coming - but always couched in data-dependent language. These include: “In considering any further adjustments” ... "In considering the pace of further reductions" ... "the timing and pace/size of future rate cuts" ... "The Committee expects that further / a series of reductions in the target range will be appropriate."
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